Operational and financial performance of publicly traded hospice companies

The performance of hospices owned by investor-owned, publicly traded hospice companies has been largely ignored by the literature.

The objective of this study was to perform a descriptive analysis that compares the operating and financial performance of hospices owned by publicly traded companies to private, for-profit hospices and to nonprofit hospices within small- and large-size categories based on patient days.

A nonparametric median test was conducted using comparisons of median values for each measure between comparison ownership groups within the small and large size categories.

Financial and operational data for the three ownership groups included in our sample were obtained from the Centers for Medicare and Medicaid Services Cost Report Data over a 3-year period with the most recent fiscal year ending between September 30, 2002 and September 29, 2003.

We measured the operational and financial performance of hospices in three areas: utilization, services, and financial performance.

Small hospices owned by publicly traded companies incurred a longer length of stay, lower operating expenses, generated higher revenue per day and profit margin, and served a greater proportion of Medicare patients compared to nonprofit counterparts. Large hospices owned by publicly traded hospices served a greater proportion of Medicare patients, offered fewer non-core services, had higher revenue per day and profit margin and incurred lower salary and benefit expense per day.

Results suggest publicly traded for-profit hospices, in comparison to for-profit and nonprofit hospices, are able to earn substantially higher profits.